A very close friend sent me some graphs and comments and I think it is valuable to read it.

I would like to present you the longest chart I have on a stock market:  The British stock market.

The first chart is the stock market index in nominal terms.

Before the 20th century, stocks were a different investment. They were judge to be risky and had to offer big dividend yields to compensate for the risk. Dividend yields on stocks were higher than bond yields. But at the time, money was linked to gold (most of the time).

In the 20th century, everything changed.

During WWI, the gold standard was abandoned to finance the war.

Different attempts to link money to gold were tried at different times and at different prices.

Finally, in 1971, the gold standard was totally abandoned.

Money became totally fiat.

With no more restriction, money could be printed and printed which lead to the accelerating destruction of its purchasing power (see 2nd chart).

And log scale (awful view or the 99% loss, accelerating from around 1914)

If you take account of that, the performance of stocks over the long term (so in real terms) is quite different (see 3rd chart).

Now, in the last chart, I would like to show you how British stocks have performed against gold (see 4th chart). Here again, we have a totally different picture.

Some of you can say that I have to take in account the dividends received (if someone has the long datas with dividends, I would be glad to provide the information) but also we have to take in account some frictions like safe keeping feees, purchasing fees etc.)

There are times to own stocks, others to own gold…

Source : https://www.globalfinancialdata.com/

  1. All my english articles here : English

5 Responses

  1. A currency can be considered « good » from two points of view that may be contradictory, that of the reproduction of money as such and that of the economy in which this currency is called to function. According to the law of Gresham which took again the writings of Aristophane, Nicole Oresme and Nicolas Copernicus which had already been interested in this phenomenon, the bad money drives the good of the circulation. But this law should be reconsidered, since this is actually a statement that favors an extra-monetary point of view on what is good money. From the monetary point of view of the circulation of debts and the dynamic reproduction of the social whole, it is the circulating currency which is the good, the so-called good money being only because it best fulfills the extra function monetary reserve of value, a point of view that is not necessarily good for judging the « functional » nature of money for its economic and social environment. This « law » can not be considered universal, since, assuming it is scientifically established, it can only be valid for metallic monetary regimes in which the presence of a market for the monetary metal is likely to lead to its existence. demonetisation (since the sale of coins at the market value of the metal becomes more profitable than their monetary use) (Fetter 1932) When the currencies are purely fiduciary, it is generally, as the dollarization processes show, the good money (the one in which one trusts) which drives out the bad traffic (the one in which one has lost confidence).

    For Locke (see: Some Considerations of the Consequences of the Lowering of Interest, and Raising the Value of Money, London, 1696), the invention of money precedes that of the state, it is part of the state of nature a state of abundance in which any individual can freely appropriate the resources of nature without harming others, private appropriation being limited by the work capacity of each individual. For him, money is in a position of sovereign authority hierarchically superior to that of the State which is reduced to a power of execution subject to this authority. The institution of the euro follows perfectly the same path: A politico-symbolic monetary act founder of the British liberal parliamentary monarchy.

    All currencies have lost 97 to 99% of their value against gold in 100 years.

    Britain, which only has « great » name keeps dreaming of its past Empire. After the loss of the colonies, she created the City of London, state in the state, which directs the world by the rogue finance via its off-shore companies and its trusts. It is the world colonization by « tax havens » (much more important than the small Switzerland …). As this colonization is undermined by this current financial crisis, the British Deep State (through the MI-5-6 and other intelligence agencies) uses the media as a weapon of misinformation and propaganda to perpetuate its global hegemony over the latest wealth. energy sources: Russia, China, Africa.

    Be interested in the treacherous Albion and its new creation: Integrity Initiative: https://www.integrityinitiative.net/ propaganda body saying « defend democracy against misinformation ». A height!

    The Integrity Initiative is a British organization that is funded by the Foreign and Commonwealth Office​ (FCO) which criticizes Russia​ and spreads negative views about Labour Party leader Jeremy Corbyn​. The organization is run by the Institute for Statecraft, a charity​ and think tank based in a Victorian Mill in Fife​.​

    ​FCO funding for the Integrity Initiative was revealed in documents leaked by the hacker collective Anonymous.​ The Integrity Initiative issued a statement blaming the leak on Russians​.

    The Integrity Initiative’s activities have included « Operation Moncloa », where their « Spanish Cluster » blocked the appointment of socialist Pedro Banos to the position of Director of National Security in Spain. The Initiative has also supported far-right, Ukrainian politicians who oppose Vladimir Putin​.

    Emily Thornberry​ raised an urgent question about the Integrity Initiative to Alan Duncan​. His response has been described by the Scottish Daily Mail as « embarassing », raising more questions than it answered.​ Duncan confirmed funding of £1,961,000 in the 2018-19 financial year and £296,500 the year before.

    Youtube Video: Inside the Integrity Initiative, the UK gov’s information war on the public w/ David Miller (E32): https://www.youtube.com/watch?v=doip79-pYn0

    In a third batch of leaks from Anonymous, it was revealed that a French company called Lexfo offered the Integrity Initiative a proposal to spread untraceable propaganda​ via several hundred news sites, in multiple languages, including monitoring and editing Wikipedia​ pages.

  2. I add another element about BREXIT that is by no means innocuous and confirms Britain’s new colonial policy to dominate Asian markets via Hong Kong and new bases by reiterating its « gunboat policy ».

    In an interview with the Sunday Telegraph of 30 December 2018, Defense Minister Gavin Williamson denounces what has been done since 1956.

    In 1956, a British-French military expedition, supported by Israel, seized the Suez Canal. . . However, the United States and the USSR forced the allies to withdraw. This fiasco marks the end of European colonization and the progressive withdrawal of European armies from the territories they occupied in the world. According to the May government, the United Kingdom turned to the European Union, which it had never thought of joining. This time is over.

    « We have to be clear, it’s a policy that has been torn apart. Britain has once again become a world nation, « said Williamson. His ministry is already negotiating the opening of new military bases abroad. Currently, the Kingdom has only Gibraltar, Cyprus, Diego Garcia and the Falklands (Malvinas). According to the minister, the world is waiting for the United Kingdom to show moral, military and global leadership, because it defends tolerance, democracy and justice.

    The article in question is on the link: http://www.voltairenet.org/IMG/pdf/The_Sunday_Telegraph_December_30_2018_p-10.pdf

  3. Great charts ! The intended message that stocks, when measured in terms of the price of gold, did not outperform gold in the long term, is most likely not correct. First of all, dividends do make a huge difference. In the deep past, stocks were bought for the huge dividends which were indeed substantial. During the past few decades, dividends fell significantly and the emphasis turned to price appreciation or capital gains. So when including dividends, the chart of stocks in terms of gold will look very very different.

    But even if dividends are included, the comparison against gold would be unfair to gold which is an asset which by definition can not go bankrupt. Gold is the only possible buy and hold asset. It can be held long term with zero risk of loss of capital. That is not true for stocks. Most public companies have disappeared from the stock market either because they went bankrupt or they were taken over. A stock market index is deceptive because it does not reflect this loss of capital caused by business failures. When a company fails, it is simply replaced in the index by some other healthier company not taking into account the capital loss incurred by the failing company.

    A fair comparison of gold against stock market investments would require the comparison of gold against a buy and hold portfolio of a certain fixed number of stocks which were bought (say 150 years ago) and never traded or sold. Of course, dividends would have to be included because suppressing dividends would lead to a wrong conclusion. It is my suspicion that gold would turn out to be a superior investment in such a comparison.

    If trading is allowed and dividends are taken into account, I believe stock market investments would easily win against gold.

  4. Robert, You are just telling us that gold is not a currency and not a wealth preservation tool ?

    You are just repeating what is written in the article with the dividend

    Fine you say stocks, portfolio without trading etc..it is a blabla

    UK is an index for the comparison so why changing ? just to help you to prove something ? also Sterling had a big collapse……
    May be would be good instead telling stuffs in the air, just produce datas….

  5. Dear Robert,
    Thanks for your comment. It is what I am saying in my article the dividends are missing BUT the fees too…

    About any trading or portfolio, it is absolutely not the subject here, It is a data base with a very long UK stock market evolution (diversified)

    Regarding the purchasing power of currencies on a long run, it is amazing how the wealth destruction occured !

    As Voltaire used to say :
    “Paper money eventually returns to its intrinsic value – zero” — Voltaire

    so much better to hold gold

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